Top Trend in Impact Investing 2012 #9: A Gap in Seed Investing in India Gets Closed

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For this trend, we turn to Mark Hand of the First Light India Accelerator. a seed-fund pilot and joint effort of Shell Foundation and First Light Ventures. First Light Ventures is a part of the Gray Ghost Ventures family, where Village Capital was first incubated. He also blogs at firstlight.vc. Over to Mark:

When First Light began two and a half years ago, we had one goal: to fill the gap in funding between family members and social venture funds. Social enterprises were popping up on the promise of VC-like funding, but found that few funders were willing to take the sort of bet on young companies that weren’t quite ready for the Acumens and Aavishkaars of the world.
Today, the market for seed-funding for social enterprises is heating up fast–especially in India. Two large microfinance organizations are building seed funds, as is one design firm and another social enterprise incubator.  Unitus has launched its own seed fund, Cambodia-based Insitor has partnered with Breathe India Ventures to make (late-ish) seed-stage investments in India, and both Ennovent and Intellicap are building up their own networks of Indian angels. Even Acumen has begun to make investment below the $300,000 mark in India. Drop the social bit, and the field gets even more crowded: Mumbai Angels leads a growing pack of city-based angel networks, and even Dave McClure and company are looking to invest in Indian startups.
So what does this mean? A ton of fundraising; increased competition for deals and higher valuations, for starters. And a general investor shakedown as entrepreneurs, flush with options, begin to get more picky about which investors and funds they work with. Hopefully, it will convince more would-be entrepreneurs to take the leap into starting their own company, knowing that one the rungs of social enterprise finance is snapping in place.

Photo credit Ananth BS.

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